Galiform is pleased to announce that it has reached agreement with a number of landlords1 which will significantly reduce its financial exposure to properties that had until recently been occupied by MFI Retail operations.  Under the terms of the agreements, Galiform will no longer be liable for the rent and associated costs payable under the leases of 6 of the 46 properties for which it was guarantor.  

The current aggregate annual net rentals (i.e. gross rent less sub tenant income) and other associated costs payable for these six properties was £3.5m, a year - about 15 per cent of the total for all 46 properties.  In return for being released from all obligations in respect of these leases, Galiform has made cash payments to the landlords totalling £5.8m.  These payments are equivalent to just over one and a half times the annual costs, which compares with the average period remaining on the leases of nearly 7 years.

For the outstanding 40 guaranteed properties, the profile of properties remaining and the net annual rent and rates (current values) for the associated leases, before any mitigating action is taken, is shown below, along with the previous situation.

 In addition to the above, agreements have also been reached with the landlords1 of a number of other 'surplus' properties, which have previously been provided for, that mean that Galiform will no longer be liable for the associated costs for the remaining period of the leases, which would have totalled a amount in excess of £9.8m. These involved payments totalling £2.8m.

Galiform's Chief Executive, Matthew Ingle, said:

"The approach we have adopted with landlords since the guaranteed property liabilities crystalised has enabled us to achieve offers that make sense for our shareholders. Whilst we are pleased with progress to date, we hope others will follow soon."

Next announcement

Galiform will announce details of its sales performance for 2008 on Thursday 15 January 2009.

Enquiries

* www.galiform.com/investors/financial-reporting/regulatory-announcements

Notes to Editors
 

• Galiform sold MFI Retail to Merchant Equity Partners in October 2006 and provided substantial funding and operational support to help MFI succeed.  This included cash payments totalling £65 million, product supply until December 2007 and services support until October 2008.
• Galiform continued to provide essential IT services and other support during the MBO process.
• The Galiform pension scheme continues to be responsible for the pensions accrued by MFI employees prior to the September 2006 sale.

About Galiform

• Galiform is the parent company of Howdens Joinery, a leading supplier of kitchens and joinery to over 200,000 trade customers across the UK and employs over 6,000 people nationwide.